Podcast
Questions and Answers
What did the Committee on Terminology of the American Institute of Certified Public Accountants define accounting as?
What did the Committee on Terminology of the American Institute of Certified Public Accountants define accounting as?
- The art of preserving historical records of financial events
- The art of communication and decision-making in an economic context
- The art of interpreting financial results in a significant manner
- The art of recording, classifying, and summarizing transactions in terms of money (correct)
What is the primary role of accounting as a historical record?
What is the primary role of accounting as a historical record?
- To serve as a tool for standards setting and communication
- To provide a history of managers’ stewardship of owners’ resources (correct)
- To interpret the economic value of social commodities
- To act as a language for intra-corporate politics
In which period did the direction of how assets should be used become determined by the owners?
In which period did the direction of how assets should be used become determined by the owners?
- Pure custodial period
- Asset-utilisation period (correct)
- Mythology Magic Communication period
- Traditional custodial period
What aspect of accounting has evolved over time in relation to the stewardship concept?
What aspect of accounting has evolved over time in relation to the stewardship concept?
What does the art of accounting involve?
What does the art of accounting involve?
What is the primary function of accounting according to the Committee on Terminology of the American Institute of Certified Public Accountants?
What is the primary function of accounting according to the Committee on Terminology of the American Institute of Certified Public Accountants?
During which period was the direction of how assets should be used determined by the owners?
During which period was the direction of how assets should be used determined by the owners?
What does accounting primarily provide in terms of the managers’ stewardship of the owners’ resources?
What does accounting primarily provide in terms of the managers’ stewardship of the owners’ resources?
During which period was the concept of 'do as instructed' prevalent in the use of assets?
During which period was the concept of 'do as instructed' prevalent in the use of assets?
What is the evolving measurement concept related to the stewardship of resources in accounting?
What is the evolving measurement concept related to the stewardship of resources in accounting?
Flashcards
Accounting Definition
Accounting Definition
Accounting is the art of recording, classifying, and summarizing transactions in terms of money.
Historical Role of Accounting
Historical Role of Accounting
The primary role of accounting is to provide a history of managers’ stewardship of owners’ resources.
Asset-Utilization Period
Asset-Utilization Period
The period during which the owners determine how assets should be used.
Stewardship Measurement
Stewardship Measurement
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Functions of Accounting
Functions of Accounting
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History of Stewardship
History of Stewardship
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Traditional Custodial Period
Traditional Custodial Period
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Evolving Measurement of Stewardship
Evolving Measurement of Stewardship
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Role of Managers in Accounting
Role of Managers in Accounting
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Recording Transactions
Recording Transactions
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Study Notes
Definition and Role of Accounting
- Accounting is defined as the art of recording, classifying, and summarizing financial transactions to facilitate informed decision-making.
- Serves as a historical record, providing insight into past financial performance and ensuring accountability.
Ownership and Asset Direction
- The direction for the use of assets transitioned to owners during the period of economic expansion and capitalism.
- Previously, during certain historical stages, the asset management was determined by external authorities or management rather than owners.
Stewardship and Evolution of Accounting
- The stewardship concept has evolved to emphasize the responsibility of managers to act in the best interest of owners, ensuring resources are utilized effectively.
- Accounting develops new measurement concepts, reflecting changes in how resources should be managed and reported, highlighting accountability.
Managers’ Resource Management
- Accounting primarily provides a framework for managers to demonstrate their stewardship of the owners' resources through reliable financial reporting and analysis.
Historical Context of Asset Management
- The concept of "do as instructed" characterized periods when managers executed directives without input from owners regarding asset utilization, signifying a more rigid structure in corporate governance.
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